The next generation of dividend heroes 2018

The Association of Investment Companies (AIC) has published an updated list of next generation dividend hero investment companies, those which have consecutively increased their dividend each year for at least 10 years but less than 20 years. This follows the publication of the investment company dividend heroes list last week (investment companies that have consecutively increased their dividends for over 20 years).

This year, there are five new joiners to the next generation of dividend heroes, who have all consecutively increased their dividend for the past 10 years. They are: Standard Life UK Smaller Companies, Henderson Far East Income, HICL Infrastructure, MedicX and International Public Partnerships.

Annabel Brodie-Smith, Communications Director, Association of Investment Companies said: “With five new joiners, there are now 22 investment companies that have increased their dividend every year between 10 and 20 years – the next generation of dividend heroes. Looking at the whole industry, 13% of investment companies have now increased their dividend every year for 10 years or longer. Investors are still searching for income and the investment company industry offers a unique combination of features that makes them attractive to income seekers. These include their ability to smooth dividends by holding back income to boost dividends in tough times and their suitability for illiquid assets such as property or infrastructure, which can offer a higher level of income.”

Income strategy: new joiners comment

Harry Nimmo, manager of Standard Life UK Smaller Companies said: “The strength of the UK Smaller Companies Trust is its consistent approach to identifying and investing in tomorrow’s success stories today. Over the last 10 years, it has seen fledgling companies rising to be members of the FTSE 100 – take NMC Health or Hargreaves Lansdown for example. Our investment process has been unchanged for four economic cycles and our emphasis on risk aversion, resilience, growth and momentum has delivered capital growth and a rising dividend and still feels right for the future. While there may well be significant challenges in the short to medium term, we remain confident that this approach will ensure that patient investors will be rewarded in the longer term.”

Mike Kerley, manager of Henderson Far East Income said: “Asia remains an increasingly attractive source of income as improving corporate governance, record cash on corporate balance sheets and strong earnings growth fuel greater dividend payments. A wide-ranging reform agenda especially in North Asia has also contributed to changing attitudes within corporates towards minority shareholders. Asian companies paid a record amount of dividends in 2017 with the trend expected to continue into 2018.

“The strategy is very much focused on total return with equal emphasis on income and capital growth. To achieve this outcome, the portfolio offers a combination of high yield, sustainable cash-flow generating companies which offer good value alongside names that offer higher underlying growth and attractive valuations with lower current yield but a genuine move towards higher dividend growth potential. As these companies surprise positively on dividends, sending a strong signal about cash flow generation and management outlook, they tend to be strongly re-rated by the market.”

Harry Seekings, Director, InfraRed Capital Partners, Investment Advisers to HICL Infrastructure said: “The delivery of long-term, stable income from a portfolio of infrastructure investments has been at the heart of HICL’s investment proposition since its inception in 2006. The company’s annual dividend has grown in each of the last 10 years and yield has typically been in the range of 4-6%. The Board has announced that the company is on track to deliver its dividend guidance of 7.85p per share for the year ending 31 March 2018 and has provided guidance for a further two years, demonstrating confidence in the portfolio.”

Next generation of dividend heroes

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Notes

1. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment.  Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs.  The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 346 members and the industry has total assets of approximately £173 billion.
2. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance.  The value of investment company shares, and the income from them, can fall as well as rise.  You may not get back the full amount invested and, in some cases, nothing at all.
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